Banks Starting To Use Public Blockchain

Things are getting very interesting within the world of blockchain. We are watching a lot of pieces moving around. It is getting difficult to predict where things are going.

We all know the banks are threatened by cryptocurrency and blockchain. Or are they? This could be a major boom to them and it is likely they see the potential.

To start, we can presume most of the major banking players are looking to provide custodial services to their clients. Digital assets will end up being a lot more than just cryptocurrency as we know it. This is not something that multi-million dollar investors are going to want to deal with. They are not going to secure their own keys and write down information to ensure they can access their wallets.

This is one area where the banks will step is.

Another is in the transformation of traditional assets. We often discuss how everything will be tokenized. This includes most of what Wall Street deals with.

Now we are seeing the evolution of that taking place.

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Banking Transaction On A Public Blockchain

JP Morgan is at the forefront of the banking interest in blockchain. For all the bashing that Jamie Dimon did with Bitcoin, he is smart enough to realize an opportunity. He also see how things will be changing within the financial arena in the future. It is likely to occur since his bank is helping to push the change.

A number of banks are taking part in a pilot project that could well become the norm in the future.

Here is the result:

“It was the first time we had tokenized deposits. I actually think it’s the first time any bank in the world has tokenized wallets on a public blockchain.

This is a rather interesting twist. We are accustomed to banks operating within their own isolated ecosystem. Yet, we are now watching them mess with public blockchains for transactions. This means incorporating public wallets as part of the transaction. This radically changes the nature (transparency) of settlements.

JPMorgan, DBS Bank and SBI Digital Asset Holdings just completed the first live trades for the program’s first industry pilot, where they traded tokenized government bonds and executed foreign exchange transactions using tokenized Japanese yen (JPY) and Singapore dollars (SGD).

According to the MAS, the pilot shows that tokenized assets can be traded, cleared and settled instantaneously, which can bring down the costs of cross currency transactions.

Here is a conclusion that is no surprise to anyone who is involved with cryptocurrency. We also know that banks care little about decentralization. The blockchain is not really of great concern to them as long as they can provide the viability of the technology.

It is also a situation that makes Ethereum even more interesting. While the last few weeks showed how that blockchain is moving towards centralized control (with the likelihood of KYC tied to it), we can see how that will hold appeal to the banks. It is something that, with upgrades and scaling, could hold great interest to these financial institutions.

“The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralized finance have the potential to transform capital markets. This is a big step towards enabling more efficient and integrated global financial networks.”

Source

Make no mistake, Wall Street is coming to this industry and they are not going to be turned away. Once we opened the door for entry, they bulldozed their way in. This is going to radically shape the industry going forward.

Forcing Changes

The banks are well aware of the threat posed to them. For this reason, they are looking to force changes in the system. Anything they can do to enhance efficiency while maintaining a piece of the pie is what they will do. At this point in time, Wall Street can actually lead the charge.

Cryptocurrency was started by the innovators but it is quickly being taken over by the major players. We see this across the board. The fact there are only a few truly decentralized blockchains shows how the early developers botched things up. We now are apt to deal with the fallout.

That doesn't mean all is lost. It simply is creating odds allies. Governments are seeking control as are the bankers. True crypto advocates are seeking freedom. There are many positions being pushed. The challenge for the cryptocurrency industry is that most people are still only concerned about price. This will end up being the downfall for most projects.

In the end this is a game of development. Can the industry out-code these major institutions? We are going to see second layers become even more important. The base layer are open to all. The difference maker will be what is built at the application level which is going to reside on layer 2.

We are dealing with hundreds of trillions of dollars here. We need to be mindful of the attraction that holds. The established system will not sit back and allow their gravy train to be taken from them.

At the same time, mindfulness to the threat is paramount. This is why we discuss resiliency so often. Hive, Ethereum, Hoskinson, or Larimer is not taking on Wall Street entities like JP Morgan without ensuring all proper forms of defense are in place. The question is how many blockchain projects are actually thinking like this?

It might seem like we are being repetitive without discussion of the same topics. However, as evidence by this pilot project, there are some powerful companies already forged their path in this. If we are going to take on the major investment houses, we best understand the challenge before us.

And that means clearly establishing those areas of defense which will be required to take them head on.

Without that, all of this will get swallowed up by the major money Wall Street brings.


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I think that the blockchain technology could replace the SWIFT system.

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I agree with that idea. Certainly this will make things operate with less friction.

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Sure. Thus, there would be no threatening countries with excluding from the SWIFT system.

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Definitely a smart move by JP Morgan. This is coming whether they like it or not. Better to be at the forefront of it and perhaps get to guide the ship a little bit instead of just being run over by it.

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I must be honest, I was a little shocked by this news. It seems almost "too acceptable"... Dimon is definitely a shrewd operator though...

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Bet the ranch they are not interesting in freedom or helping humanity forward. They see an opportunity to make a lot of money while saving on existing costs.

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It is ironic banks are starting to utilize public blockchain instead of private ones but it is making sense of their intent as they seek not only to remain relevant but dominant with services they offer.

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Bank must accept the blockchain technology is so advance and they can work against and instead they should work with it to get better

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Blockchain reshapes all the industries in the world and the financial sector and banks are the ones that are benefiting significantly from that. Now I was just reading these days that some blockchain investors were thinking of acquiring banks, thus embedding the technology much faster and in an innovative way. Let's see how this sector will look in the end.

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Forcing a change is what they look for and if they should get the changes to their favor I think the blockchain merits would die over night as the money guys would bastardize the whole process.

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Jp Morgan is a smart bank. A big centralized bank leaning towards defi. This is a smart move because they see that change is coming and instead of reject it and be cast aside, they embrace it and stay at the top.

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I was expecting Wall Street to get into things earlier because the entire banking system is very slow. If they can get things done over block chain then the time spent to convert fiat would be far cheaper.

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